Calculation of Component Prices

Component Prices are calculated using monthly average
dairy product prices for the month in question. In the
folowing example, component prices for May 2016
is calculated by using the monthly (weighted) average of
different weekly NASS prices. They were then released on
Jun 03, 2016

NASS Monthly Average Prices

The component prices calculated in the section use monthly
average U.S. NASS survey prices. These monthly average prices
are calculated by a weighted average.

The monthly average prices used in this section are calculated
from NASS prices for each week.

These monthly average prices are as follows:

AA Butter 2.0580
Cheddar Cheese 1.4104
Dry Whey 0.2505
Nonfat Dry Milk 0.7607

Butterfat Price

(used for Class III and Class IV prices and in making payment to producers)

= (AA Butter Avg – 0.1202) *1.2

= 1.9378 * 1.2

= 2.3254

So, the Announced Butterfat Component Price for May 2016 is 2.3254